GBP/USD pares recent losses around 1.2200 despite mixed UK employment data

GBP/USD buyers cheer the US dollar pullback while paying a little heed to the not-so-impressive UK jobs report. That said, the cable pair takes the bids to refresh the daily top surrounding 1.2200, extending the bounce off the multi-day low flashed on Monday, heading into Tuesday’s London open.

UK’s Claimant Count Change improved to -19.7K from -49.4K expected and -65.5K prior while the Unemployment Rate also rose past 3.6% expected to 3.8%. It’s worth noting that better-than-forecast Average Earnings Excluding Bonus, to 4.2% versus 4.0% market consensus, seem to have favored the GBP/USD buyers.

Read: UK ILO Unemployment Rate rises to 3.8% in April vs. 3.6% expected

It’s worth noting that the US Dollar Index (DXY) extends pullback from the highest levels since 2002, marked the previous day, as traders brace for Wednesday’s Federal Open Market Committee (FOMC). Also exerting downside pressure on the greenback gauge, as well as fueling the GBP/USD prices, could be a pullback in the US Treasury yields.

The benchmark US 10-year Treasury bond yields pare recent gains around 3.36%, down 1.1 basis points (bps) from the highest levels since April 2011, marked the previous day. The pullback in yields contradicts the recently firmer chatters surrounding the Fed’s 75 bps rate hike. As per Reuters, the US rate futures imply a 96% chance of the Fed raising rates by 75 bps at the June meeting, versus not more than 30% a few days back.

The cable pair slumped to the multi-month lows the previous day after the UK’s monthly GDP printed the second consecutive negative figures. Also weighing on the GBP/USD prices could be the UK Government’s presentation of the proposal to alter the Northern Ireland Protocol (NIP). “The UK government has published plans to get rid of parts of the post-Brexit deal it agreed with the EU in 2019,” said the BBC. The news also said that the proposal needs to be voted in the British Parliament while saying, “The government is promising to remove "unnecessary" paperwork on goods checks and that businesses in Northern Ireland will get the same tax breaks as those elsewhere in the UK.”

Moving on, the US Producer Price Index (PPI) for Apri, expected 10.9% YoY versus 11.0% prior, could also entertain traders. However, major attention remains on the Bank of England (BOE) versus Fed moves.

Technical analysis

A daily closing beyond the last month’s bottom surrounding 1.2155, also the previous yearly low, appears necessary for the GBP/USD bulls. Until then, the cable pair remains vulnerable to witnessing a slump towards the 1.20000 psychological magnet.